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NetApp always seems to pull a rabbit out of the hat when there are major shifts in the business. When the market moved beyond workstations, NetApp rode the dot.com bubble. When that burst, it pivoted into enterprise storage and took EMC head on very successfully. When the virtualization craze began to take hold and VMware, an EMC-owned company, started its ascendency, NetApp embraced the trend and became a leader in storage for VMware shops, despite EMC’s influence.

Now, more than ever, the landscape of the storage business and how customers buy and deploy storage is changing. NetApp’s magic touch is being challenged as evidence by its slowing growth and increasing competition in the high end of its core NAS market (e.g. from EMC) and the emerging flash startup players (e.g. Pure Storage and Nimble). The company must once again find a way to expand its total addressable market (TAM) and fire up its growth engine if it is to remain relevant to CIOs.

What's their answer? I had a chance to sit down with NetApp CEO Tom Georgens to discuss these issues, NetApp’s culture, its core products and their growth prospects.

These next few years more than ever will test Georgens’ leadership style. Do they modernize slowly? Yes. Are they still considered a dynamic company? Not by most. Georgens is very unassuming. He never tries to seek out the spotlight, he’s more engineer than showman, yet his reserved leadership style is exactly what makes NetApp click. Never will you see Georgens tooting NetApp’s horn in a space outside of their comfort zone. If he is confident in NetApp’s presence in a particular area he lets their products and customer feedback do the talking.

NetApp Culture – Important but Software is the Silver Bullet

NetApp is a Silicon Valley success story and you can’t have a conversation with senior leaders without them pointing to the culture of the company. NetApp consistently gets high marks for company culture and was recently ranked the #3 multi-national company in terms of places to work. Culture is critical but NetApp’s most important opportunity is not only it’s people but the changing landscape that is the enterprise storage and computing marketplace.

Software growth has outpaced that of hardware for decades and the world is going “Software-Defined” crazy. Most of NetApp’s software is embedded into its hardware (the OnCommand management suite is one exception). Rather than try to own key pieces of the software stack, such as backup software or database, NetApp’s strategy is to partner with others to bring more functionality to NetApp’s storage. Georgens believes this allows NetApp to expand its market while at the same time playing nice with partners. Notably, NetApp’s major competitor, EMC takes the opposite approach. It owns numerous software assets in virtualization, backup, database, information management, security and the like; and often knocks heads with potential partners as a result. But this strategy drives margins and product pull through (software and hardware sold together) and arguably drives the company’s higher growth rate.

Nonetheless—Georgens is crystal clear in his thinking on this topic. Partnering expands customer options and ostensibly NetApp’s market opportunity.

Looming Questions About NetApp?

Growth

A big question for NetApp is how does it re-ignite growth? Can it return to the days of putting up growth rates that are 2X the market?

CEO Tom Georgens is leading the company through another phase of expansion targeting cloud computing. Software-defined storage, cloud and flash are seen as the new growth areas for storage. The question is how will NetApp capitalize on these new market forces to power its growth?

NetApp and Georgens are betting on these mega trends by investing in partnerships and rolling out new functionality with ONTAP, its new storage OS. The knock on NetApp has historically been that it doesn’t easily scale and Clustered ONTAP is designed to address this issue and power the company into the upper end of the market, while at the same time maintaining its core base. The company is going through a technology transition which is always tenuous, but NetApp has a loyal customer base and has managed such transitions before.

Cloud Computing

The vast majority of NetApp’s sales now go through the channel. The company’s CMO, Julie Parrish came from running NetApp’s channel programs and this is a key part of NetApp’s partnering ethos. Georgens stressed to me the importance of partners in terms of NetApp’s growth strategy, which he believes is a core asset. Cloud service providers are becoming the hottest part of the channel and NetApp needs hot products sold into this growing market segment.

Will the cloud and a major emphasis on partnerships be the next rabbit that NetApp pulls out of the hat? Will the mega trend of cloud and data impact NetApp's top line revenue growth? Can NetApp be a player in the cloud?